BSEC chief asks asset management companies to restore investors' confidence

The chairman of the securities regulator has asked the asset management companies (AMCs) to ensure their due role in turning the mutual funds (MFs) into safe investment tools.

The chairman of the Bangladesh Securities and Exchange Commission (BSEC) Prof. Shibli Rubayat Ul Islam has also laid importance on prioritising the interest of unit holders.

His instructions and suggestions came Sunday at a meeting held at the BSEC. The AMCs' top officials such as chief executive officers (CEOs) attended the meeting.

Taking into account the scenario of the country's MF industry, the BSEC chairman told the participants that MFs are treated as the safest investment tools across the world.

"The chairman has asked the AMCs to be proactive in restoring investors' confidence in the MFs," said theCEO of an AMC on anonymity.

The CEO of another AMC said at the meeting the BSEC chairman Prof. Islam hinted that the monitoring on the operation of MFs is going on.

"It's clear from his speech that the monitoring on the nitty-gritty of the MFs will be intensified in coming days," the CEO said.

The chairman has also suggested the AMCs to place their demands through their association, according to the CEO.

At the meeting, the BSEC chairman also suggested the AMCs to come up with the proposals of diversified MFs, other than existing liquid ones.

The representative of another AMC saidthe securities regulator will time to time sit with the AMCs to discuss different issues of the MFs.

At the meeting, the BSEC commissioner Prof. Md. Mizanur Rahman gave a presentation on the current scenario of the country's MF industry.

After the commissioner's presentation, the representatives of the AMCs placed their opinions regarding the management of the MFs.

In their speeches, most of the representatives urged the regulator to ensure incentives for investments made in MFs in the upcoming budget.

They said investors will be attracted to MFs if they are able to avail more tax benefit.

Presently, dividend income up to 25 thousand is considered as tax free limitfor the investments made in open-end MFs.

Dividend income up to 50 thousand is also considered as tax free income that comes from the closed-end MFs.

At Sunday's meeting, the AMCs also urged the regulator to modernise the rules of MFs and ensure equal application of the rules on all AMCs.

The securities regulator so far issued licences to 48 AMCs to manage the MFs.

Presently, the number of listed MFs (closed-end) in Bangladesh is 37 while the number of open-ends is 61, according to the BSEC.

The units of the majority number of listed MFs have been traded below face value for a long time.

Following investors' less participation and unprofessionalism of fund managers, the country's mutual fund (MF) industry still remains smaller than many regional countries, including neighbouring India.

The GDP of Bangladesh is estimated at US$330 billion while the amount of assets under management (AuM) in India is US$ 368.41 billion as of October 2020.

The AuM in other regional countries such as Thailand, Pakistan and Malaysia are also much higher than that of Bangladesh.

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